Although it is still rising, the slowing rate of U.S. prime residential mortgage-backed securities (RMBS) serious delinquencies may signal a nearing highwater mark, according to the latest ‘Performance Metrics’ results from Fitch Ratings.
Prime delinquencies rose for the 38th consecutive month as Alt-A and subprime RMBS delinquencies continued to drop. However, the rate of increases has slowed considerably since April due to numerous factors, chief among them the increased liquidation rate of delinquent loans, according to Vincent Barberio, a managing director at Fitch.
‘Prime delinquency increases have averaged 12 basis points a month since April, which compare favorably to 44-basis-point monthly averages between April 2009 and March 2010,’ Barberio says. ‘While increased liquidations of distressed properties are helping to stem the rise in delinquencies, it also means that realized losses are rising.’
The monthly annualized net-loss rate for prime RMBS has more than doubled, from 0.8% to 1.7% over the past year, Fitch reports.
Prime jumbo RMBS 60+ day delinquencies rose to 10.6% for July – up from 10.4% for June and 6.9% a year ago. The delinquency rate for loans originated prior to 2005 was 4.9%, while the rate for 2005-2008 vintage loans more than doubled, to 12.5%
California prime jumbo-loan performance weakened slightly in July, with 60+ days delinquencies rising to 12.2% from 12.1% in June (and 8% in July 2009). During the first seven months of 2010, Florida had the biggest jump (2.5%) of the five states with the highest volume of jumbo loans outstanding. New Jersey was second of the five states, with a 2% increase over the same period.
The five states with the highest volume of prime RMBS loans outstanding (i.e., California, New York, Florida, Virginia and New Jersey) combined to represent approximately two-thirds of the total sector.
SOURCE: Fitch Ratings